Professional Documents
Culture Documents
ACT, 1956
CONTENTS
CAHPTER I - PRELIMINARY
SECTIONS Page
CHAPTER II - ESTABLISHMENT,
INCORPORATION AND SHARE CAPITAL
OF THE BANK
I
CHAPTER IV - BUSINESS AND FUNCTIONS OF THE BANK
SECTIONS Page
II
CHAPTER V - GENERAL
SECTIONS Page
THE SCHEDULE
III
The
State Bank of Pakistan
Act, 1956
Act No. XXXIII of 1956
CHAPTER I
PRELIMINARY
(1) This Act may be cited as the State Bank of Pakistan Act, 1956
(3) It shall come into force at once and except Section 46, shall
be deemed to have taken effect on the from the twelfth day of May, 1948.
2. Definitions
1
(c) "the Bank" means the State Bank of Pakistan;
(d) "Bank Notes" means notes made and issued by the Bank in
accordance with Section 24 and include currency notes of the
Government of Pakistan issued by the Bank;
(g) "Director" means a Director for the time being of the Central
Board;
(l) "rupee coin" means one-rupee coin and one-rupee notes which
are legal tender in Pakistan;
2
(m) "scheduled Bank" means a bank for the time being included in
the list of banks maintained under sub-section (1) and Section
37;
CHAPTER II
4. Share Capital
(1) The original share capital of the bank shall be three crores
of Rupees divided into three hundred thousand fully paid-up shares of the
nominal value of one hundred rupees each, out of which not less than
fifty-one percent shall be held by the Federal Government and the balance
by the public.
3
(3) The nominal value of Issue price, the manner in which new
shares may be issued and allotted and their assignment to the registrar of
share holders maintained under sub section (1) of section 7, shall, subject
to approval of Federal Government, be determined by the Central Board.
6. Notice of Trust
7. Register of Shareholders
4
(c) a company registered under the Companies Act, 1913, or a
society registered under the Co-operative Societies Act, 1912,
or any other law for the time being enforced in Pakistan
relating to Co-operative societies or a scheduled bank;
(d) Deleted.
(4) The shares of the Bank may be held under his official
designation by the holder of any public office which may be notified in the
Gazette by the local board and in regard to transfers the following
provisions may apply, namely:-
(b) when the holder of the office transfers the share to a party not
being his successor in office, the transfer shall be made in the
manner prescribed by regulations.
5
CHAPTER lll
MANAGEMENT
1
SBP (Amendment) ordinance, 2001 (Ord. No. IX of 2001 dt. 20-02-2001)
6
(4) generally for carrying out any other business or
discharging any functions incidental to, or connected with, the affairs
of the Bank."
7
Provided that the Governor may, in an emergency which in his
opinion requires immediate action, take such measure as may be necessary
in the circumstances and shall report such measure for the approval of the
Central Board at its next meeting.
8
(ii) Federal Minister for Commerce’ or Secretary,
Ministry of Commerce Member
(c) ‘meet for the purposes of clauses (a) and (b) before the
finalizaton of the budget to determine the extent of
Government borrowing from commercial banks taking into
account credit requirement of the private sector, liquidity
expansion determined by the Central Board and expected
changes in net foreign assets of the banking system;
(3) The State Bank of Pakistan shall place before the Board-
9
(a) relevant data relating to monetary expansion and Government
borrowing; and
(c) {OMITTED}
(1) The Governor of the Bank shall be the chief executive officer and
shall, on behalf of the Central Board, direct and control the whole affairs
of the Banks.
10
neither the salary of the Governor nor his other terms and conditions
of service shall be varied to his disadvantage after his appointment:
(3A) At any time when the office of Governor is vacant, the Federal
Government may appoint an Acting Governor:
"Provided that the office of Governor shall be filled in within a
period not exceeding three months."
(6) Deleted
(7) The Governor and a Deputy Governor shall devote their whole
time to the affairs of the Bank.
(8) The Governor or a Deputy Governor, as the case may be, may, in
addition to his duties as the Governor or a Deputy Governor, be entrusted
by an order of the Federal Government with such duties for such period as
may be specified in the order.
(9) The Governor and a Deputy Governor shall on the expiry of their
terms of office be eligible for reappointment.
11
(a) Who is a member of the Central or Provincial Legislature;
(d) Deleted
12
12. Local Boards, their constitution and functions
(1) A Local Board shall be constituted for each of the three areas
specified in the Schedule and shall consist of --
(3) A Local Board shall advise the Central Board on such matters as
may be generally or specifically referred to it, and shall perform such
duties as the Central Board may, by regulations, delegate to it.
(c) who is, or at any time has been, adjudicated an insolvent or has
suspended payment or has compounded with his creditors; or
(f) who is a Director of any bank other than the Bank, but he shall
not be disqualified or cease to be a Director if he is a Director
of a bank who is a society registered under the Co-operative
13
Societies Act, 1912 or any other law for the time being in force
in Pakistan relating to co-operative societies; or
(g) who is not, within six months from the date of his becoming a
Director or Member, as the case may be, registered as a holder
of unencumbered shares of the Bank of the nominal value of
five hundred rupees;
(2) Nothing in clause (b) and (g) of sub-section (1) shall apply to the
Government official nominated as s Director by the Federal Government.
(1) The elected Directors and Members shall hold office for three
years on the expiry of which they shall cease to hold office.
(2) A Director or member shall not be removed from his office before
the completion of his tenure except when he has done any act which is a
breach of trust reposed in him or is guilty of misconduct:
14
Provided that he shall not be removed without a notice to show
cause.
14A. Deleted
(1) Subject to sub section (2), the 3President may remove the
Governor from his office, if be becomes permanently incapable of
performing his duties, or is subject to any of the disqualification specified
in sub-section (10) of section 10, or has done any act which is breach of
the trust reposed in him, or is guilty of misconduct:
Provided that before taking action under his sub section, the
Governor shall be given a notice to show cause and an opportunity of
being heard.
(3) (a) The Governor, a Deputy Governor or a Director may resign his
office by statement to that effect in writing signed by him and addressed to
the Federal Government.
3
SBP (Amendment) Ordinance, 2002 (Ord. No. CX of 2002 dt. 4-11-2002)
15
(4) Any Director or Member vacating office under this section
shall not be eligible to become a Director or Member, as the case may be
until the expiry of the term of office for which he was nominated or
elected.
16
CHAPTER IV
17
(c) The purchase, sale and rediscount of bills of exchange and
promissory notes drawn on and payable in Pakistan and
bearing the signature of a scheduled bank, and issued or drawn
for the purpose of holding or trading in securities of the federal
Government or a Provincial Government and maturing within
ninety days from the date of such purchase or rediscount,
exclusive of days of grace;
Provided that the bank may from time to time issue to a corporation
which may have dealings with the Bank under this sub -clause any
directions which can be issued to a banking company under the Banking
Companies Ordinance, 1962 (LVII of 1962) and in the event of anybody
while carrying out any direction hereunder, dither willfully making a false
statement shall be punishable under sub section(1) of Section 83 of the
said Ordinance and in the event of any contravention of default in
compliance with any director, any Director or Officer who is knowingly a
party to the contravention or default shall be punishable under sub-section
(5) of Section 83 of the said Ordinance, and the provisions of Section 84
of the said Ordinance shall apply to such proceedings as if such
corporation were a banking company;
(3) (a) The purchase and the sale of approved foreign exchange;
18
whose currency has been declared as approved foreign
exchange and maturing within one hundred and eighty days
from the date of purchase, provided that no such purchase, sale
or rediscount shall be made in Pakistan except with a scheduled
bank;
(c) such bills of exchange and promissory notes as are eligible for
purchase or rediscount by the Bank; or otherwise fulfil the
requirements of clause (2) but are payable on demand; and
(4A) The making of loans and advances out of the Rural Credit
Fund established under Section 17A for the purposes specified
therein;
19
(4C) The making of loans and advances out of the Export Credit
Fund established under Section 17C for the purposes specified
therein;
20
(b) The restrictions relating to maturity shall not apply to securities
held by the Bank on the date on which this Act comes into
force or any securities that may be received as assets under the
Pakistan (Monetary System and Reserve Bank) Order 1947;
(c) The amount of such securities held at any time in the Banking
Department shall be so regulated that the total value of such
securities shall not exceed the aggregate amount of the share
capital of the Bank, the Reserve Fund and four fifths of the
liabilities of the Banking Department in respect of deposits;
21
(c) the collection of the proceeds, whether principal or interest,
profit, dividend or other return, of any securities;
(14) The purchase and sale of gold coin and gold or silver
bullion;
22
(18) The exercise of powers and the performance of functions
and duties entrusted to the Bank by or under this Act or any other law for
the time being in force;
(19A) 4Establish funds for the purposes of this Act or for any
specified purposes as the Federal Government may notify in this
behalf; and the purposes of any such fund, its management and any
contributions to be made and the rules of the operations of each such
fund shall be such as the Central Board may, form time to time,
determine; and”.
(20) Generally, the doing of all such matters and things as may
be necessary, incidental to or consequential upon the exercise of its
powers or the discharge of its duties or functions under this Act.
(2) The Rural Credit Fund shall be applied by the Bank to the
following objects, namely:-
23
three years from the date of the making thereof, against such
security as the Bank from time to time, specify in this behalf;
24
deem fit repayable on the expiry of a fixed period, not
exceeding five years from the dte of the making thereof,
against such security as the Bank may, from time to time,
specify in this behalf;
(2) The Export Credit Fund shall be applied by the Bank to the
following objects, namely:-
25
(a) The making of medium-term and long-term and advances to
scheduled banks and other credit institutions created or
established by or under any law for the time being in force, as
refinance against their medium-term and long-term loans and
advances given for financing exports from Pakistan, on such
terms and conditions as to security and otherwise as the Bank
may, from time to time, lay down in this behalf;
17E. Housing Credit Fund. (1) The Bank shall establish and maintain a
fund to be called the Housing Credit Fund to which shall be credited:-
26
(b) appropriations of such amount from the profits of the Bank as
may be determined by the Bank in consultation with the
Federal Government.
27
limitation contained in sub-clauses (a) and (b) of Clause (2) or sub-clauses
(a) and (b) of clause (3) or clause (4) of section 17
28
(2) Purchase its own share or the share of any other bank or of
any company, or grant advances or loans upon the security of any such
shares;
(6) Omitted
29
(c) The Federal Government and each Provincial Government
shall entrust the Bank, on such conditions as may be agreed
upon between the Government concerned and the Bank, with
the management of the public debt and with the issue of any
new loans.
(1) The Bank shall have the sole right to issue Bank Notes made
payable to bearer on demand in Pakistan in accordance with the provisions
hereinafter made, provided that the currency notes of the Government of
Pakistan supplied to the Bank by the Government may be issued by it for a
5
SBP (Amendment) Ordinance, 2002 (Ord. No. CX of 2002 dt. 4-11-2002)
30
period which shall be fixed by the Federal Government on the
recommendations fo the Central Board.
Provided that any Note of such series may, within such period after
the date so specified as the Federal Government may, by a like
notification, appoint in this behalf, be tendered for exchange at such
offices, branches and agencies, if any, of the Bank as may be specified for
the purpose, and any such office, branch or agency shall exchange the
note.
(2) The Issue Department shall not issue Bank Notes to the
Banking Department or to any person except in exchange for other Bank
Notes or for such coin, bullion, special drawing rights held with the
International Monetary Fund, approved foreign exchange or securities as
are permitted under this Act to form part of the assets of the Issue
Department.
31
27. Denominations and form of Bank Notes
The Bank shall not re-issue Bank Notes which are torn, defaced or
excessively soiled.
(1) The assets of the Issue Department shall not be less than
the total of its liabilities and shall be maintained as follows:-
(a) of the total amount of the assets, assets of such value as the
Federal Government in consultation with the Bank, may, by
notification in the official Gazette, specify shall be held in gold
coins, gold bullion, silver billion, special drawing rights held
with the International Monetary Fund or approved foreign
exchange; and
32
(iv) promissory notes obtained by the Bank in respect of
advances and loans made under clause (4) of Section 17
against such securities as are mentioned in sub-clauses (a)
and (b) of that clause; and
(2) For the purposes of this section, gold coin and gold bullion
shall be valued at the market value of the fine gold content thereof, silver
billion shall be valued at the market value of the fine silver content
thereof, rupee coin shall be valued at its face value and rupee securities
and securities specified in clause (4) shall be valued at the market rate for
the time being obtaining.
(3) Of the gold coin and gold or silver billion held as assets not
less than seventeen-twentieths shall be held in the custody of the Bank
including its branches, officers or agencies, and the gold or silver
belonging to the Bank which is in any other bank or in any mint or
treasury or in transit may be reckoned as part of the assets.
(a) balances standing to the credit of the Bank with the principal
currency authority of a country whose currency is an approved
foreign exchange, or at any bank in such country;
33
(c) securities of a Government with an unexpired currency of not
more than five years and payable in a currency which is an
approved foreign exchange.
(2) For the purposes of this section any Bank Note which has
not been presented for payment within forty years from the first day of
July following the date of its issue shall be deemed not to be in circulation
and the value thereof shall notwithstanding anything contained in sub-
section (2) of Section 26 be paid by the Issue Department to the Banking
Department; but any such Bank note if subsequently presented for
payment, shall be paid by the Banking Department
(1) The Bank shall issue rupee coin on demand in exchange for
Bank Notes and Bank Notes on demand in exchange for coin which is
legal tender under the Pakistan Coinage Act.
34
(2) The Bank shall in exchange for Bank Notes for five rupees
or upwards supply Bank Notes of lower value or coins which are legal
tender under the said Pakistan Coinage Act, in such quantities as may in
the opinion of the Bank be required for circulation. The Federal
Government shall supply such coins to the Bank on demand and if it fails
to do so at any time the Bank shall be released during the period of such
failure from obligation to supply them to the public.
(3) The Federal Government shall take over from the Bank at
such times and in such quantities as the Bank may, with the previous
approval of the Federal Government, determine rupee coins which are not
required for purposes of circulation against payment.
The Federal Government shall not re-issue any rupee coins taken
over under sub-section (3) of Section 33 nor put into circulation any rupee
coin except through the Bank and the Bank shall not dispose of rupee coin
otherwise than for purposes of circulation or by delivery to the Federal
Government under the preceding section.
35
amount of the Bill, Hundi, Promissory Note or engagement in respect
whereof the offence is committed.
(2) Omitted
Explanation:- For, the purposes of this section liabilities shall not include
the paid-up capital or the reserve, or any credit balance in the profit and
loss account of such bank or the amount of any loan taken from the Bank
or the amount received as loan in Pakistan currency by such bank from the
Federal Government whether out of a foreign currency loan contracted by
the Government or otherwise or the amount of foreign currency loans
obtained by such bank directly from any foreign agency.
(3) Every scheduled bank shall send to the Bank returns signed
by two responsible officers of such bank containing such information as
may be deemed necessary for carrying out the purposes and object of this
Act at such periods of time as the Bank may from time to time direct
(4) If at the close of business on any day before the day fixed
for the net return under the preceding sub-section, the balance held at the
Bank by any scheduled bank is below the minimum fixed by sub-section
(1) or varied under sub-section (2), such scheduled bank may be ordered
by the Bank to pay to the Bank-
(a) in the case of its liabilities assumed on basis other than profit
and loss sharing, in respect of such day penal interest at a rate
three per cent above the bank rate on the amount by which the
balance with the Bank falls short of the fixed minimum, and if
on the day on which the next return is due such balance is still
below the fixed minimum as disclosed by this return, the rate
36
of penal interest may be increased to a rate five per cent above
the bank rate in respect of that day and each subsequent day on
which the balance held at the Bank at the close of business on
the day is below the fixed minimum; and
(b) in the case of its liabilities assumed on the basis of profit and
loss sharing, in respect of such day a penalty at a rate that may
be prescribed by the Bank from time to time on the amount by
which the balance with the Bank falls short of the fixed
minimum, and if on the day on which the next return is due
such balance is still below the fixed minimum as disclosed by
this return, the penalty may be increased by twenty-five per
cent in respect of that day and each subsequent day on which
the balance held at the bank at the close of business on the day
is below the fixed minimum.
(b) the Bank may prohibit the scheduled bank from receiving after
the said day any fresh deposit, and if default is made by the
scheduled bank in complying with such prohibition, every
director and officer of the scheduled bank who is knowingly
and wilfully a party to such default or who through negligence
or otherwise contributes to such default shall by order of the
Bank be punishable in respect of each default with fine which
may extend to five hundred rupees for each day after the first
on which a deposit received in contravention of such
prohibition is retained by the scheduled bank.
37
Explanation:- In this sub-section "officer" includes Manager, Secretary,
Branch Manager and Branch Secretary.
(8) The penalties imposed by sub-Section (4), (5), (6) and (7)
shall be payable on demand made by the Bank and in the event of refusal
by the defaulting bank, director or officer to pay on such demand, may be
levied by a direction of the principal Civil Court having jurisdiction in the
area where an office of the defaulting bank is situated, such direction
being made only upon application made in this behalf to the Court by the
Bank, with the previous sanction of the Federal Government.
(1) The Bank shall maintain at all its offices and branches an
up-to-date list of banks declared by it to be scheduled banks under Clause
(a) of sub-section (2).
38
Provided that in the case of a co-operative bank, an exception may
be made by the Bank;
(iii)satisfies the Bank that its affairs are not being conducted in a
manner detrimental to the interest of its depositors;
The Bank may require any Corporation with which it has any
transaction under Section 17 to furnish returns referred to in under sub
section (3) of Section 36, and if it does so require, the provisions of sub-
Section (6), (7) and (8) of Section 36 shall apply, so far as may be, to such
Corporation as if it were a scheduled bank.
The Bank shall compile and publish in such manner and at such
times as the Federal Government may direct, a consolidated statement
from such information as may be received under this Act.
39
40 Returns
(2) The Bank shall also, within four months from the date on
which the annual accounts of the Bank are closed, release to the public and
simultaneously transmit to the Federal Government a copy of the annual
accounts signed by the Governor, the Deputy Governor, if any, and the
Chief Accounting Officer of the Bank, and certified by the Auditors
together with a report by the Central Board on the working of the Bank
throughout the year, and the Federal Government shall cause such
accounts and report to be published in the official Gazette.
(3) The Bank shall also, within two months from the date on
which the annual accounts of the Bank are closed, transmit to the Federal
Government a statement showing the name, address and occupation of,
and the number of shares held by each shareholder of the Bank.
CHAPTER V
GENERAL
40
the shareholders out of the net annual profit a dividend on the shares at a
rate to be fixed by the Federal Government from time to time. Any surplus
remaining thereafter shall be paid to the Federal Government.
43. Auditors
(1) Not less than two Auditors shall be elected and their
remuneration fixed at the annual general meeting. The Auditors may be
shareholders, but no Director, Member or other Officer of the Bank shall
be eligible during his continuance in office to be so elected. Any Auditors
so elected shall be eligible for re-election on vacating office.
(2) All Auditors elected under this section shall be and continue
to act as Auditors until the first annual general meeting after their
respective elections.
41
opinion the Balance Sheet is a full and fair Balance Sheet containing all
necessary particulars and property drawn up so as to exhibit a true and
correct view of the state of affairs of the Bank, and, in case they have
called for any explanation or information from the Central Board, whether
it has been given and whether it is satisfactory. Any such report made to
the shareholders shall be read, together with the report of the Central
Board, at the annual general meeting.
(1) For the purpose of Section 124 of the Evidence Act, 1872, the
provisions of Part IV of the Code of Civil Procedure, 1908 and the
provisions of rule 27 of Order V, and rule 52 of Order XXI of the said
Code, the Bank and any person in the service of the Bank acting in his
capacity as such shall be deemed to be public officer.
42
sub-section (1) and (2) even if a copy of such report has been supplied to
the banking company to which the report pertains or to the Federal
Government or to the Pakistan Banking Council constituted under Section
9 of the Banks (Nationalisation) Act, 1974 (Act XIX of 1974).
6
SBP (Amendment) Ordinance, 2001 (Ord. No.IX of 2001 dt. 20-02-2001)
7
SBP (Amendment) Ordinance, 2001 (Ord. No.IX of 2001 dt. 20-02-2001)
43
50. Liquidation of the Bank
(1) Except in the performance of his duties under this Act every
officer or servant of the Bank shall preserve and aid in preserving secrecy
with regard to all matters relating to the financial or monetary affairs of
any institution, person, body of persons, any Government or authority
whether in Pakistan or outside that may come to his knowledge in the
performance of his duties.
44
duty as such, shall be guilty of an offence and shall on conviction by a
court of competent jurisdiction be punished with imprisonment of either
description for a term which may extend to six months or with fine which
may extend to Rs. 500 or with both.
(c) the maintenance of the share registers, the manner in which and
the conditions subject to which shares may be held and
transferred, suspension and the manner of suspension of
transfer of shares from one register to another and generally, all
matters relating to the rights and duties of shareholders
45
(e) the manner in which notices may be served on behalf of the
bank upon shareholders or other persons;
(k) the manner and form in which contracts binding on the Bank
may be executed;
(l) the provision of an official seal of the Bank and the manner
and effect of its use;
(m) the manner and forms in which the balance-sheet of the Bank
shall be drawn up, and in which the accounts shall be
maintained;
46
(n) the remuneration of Directors and Members;
(o) the relations of the scheduled banks with the bank and the
returns to be submitted by the Scheduled banks to the Bank;
47
XVII OF 1955
55. Repeal
(1) The State Bank of Pakistan Ordinance, 1955, is hereby
repealed.
THE SCHEDULE
(See Section 7)
48